Renting Versus Buying A Home

Renting Versus Buying a​ Home
Renters are often in​ a​ quandary as​ to​ whether it​ makes sense to​ continue renting or​ buy a​ home .​
Buying a​ home makes more sense, particularly when taking a​ long-term view .​
Yes, even in​ the current hot real estate market.
Renting – Advantages
Renting can have a​ few advantages depending on the part of​ the country you live in .​
The primary advantage is​ your monthly rent payment may be less than an​ equivalent mortgage .​
a​ secondary advantage is​ the fact that maintenance and improvements to​ the property are the responsibility of​ the landlord .​
Still, these advantages pale in​ comparison to​ the disadvantages of​ renting.
Renting – Disadvantages
The disadvantages of​ renting are significant .​
If you have any opportunity to​ purchase a​ home or​ condominium, it​ almost always makes sense to​ do so.
The biggest disadvantage of​ renting is​ the loss of​ value .​
Assume you rent a​ residence for $1,000 a​ month and you live in​ the residence for two years .​
You will have paid a​ total of​ $24,000 in​ rent, a​ pure expenditure .​
The $24,000 is​ simply gone and you will have nothing to​ show for it​ other than the time you spent in​ the home .​
Compare this to​ what your landlord has gained.
Rent payments are closely aligned with a​ landlord’s mortgage payment .​
Using the above example, lets assume your $1,000 rent exactly equals the mortgage payment .​
For two years, you have indirectly paid the landlord’s mortgage, helping them build equity in​ the house by paying down the loan .​
In addition, the landlord has benefited from the appreciation of​ the property.
By appreciation, I​ simply mean the amount of​ increase in​ the value of​ the house .​
If the rental appreciated $20,000 in​ two years, the landlord has received a​ windfall .​
They may have seen a​ gain of​ $24,000 in​ appreciation and payments lowering the mortgage .​
As a​ renter, you have made this all possible .​
The landlord no doubt would like to​ thank you.
Now, what would have happened if​ you had purchased a​ similar home with similar financial figures? You would have seen an​ increase in​ YOUR wealth of​ $24,000, not the landlord’s wealth .​
If you renting, these figures should make your teeth grind.
If you are renting, you should be out shopping for your own property .​
After all, isn’t it​ time to​ make your money work for you, not a​ landlord?

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